Chile’s Automotores Drives for 8-Handle

Automotores Gildemeister is aiming for a yield in the low to mid 8% range on its new bond, according to investors. The distributor of Hyundai and other car brands in Chile, Peru and Uruguay is meeting investors through today, and is expected to issue a 7-10 year deal at $250m-$300m. The issuer plans to meet US investors beginning Tuesday and finishing the following Monday, according to bankers managing the sale. Proceeds from the proposed issuance will primarily be used to refinance existing debt and improve liquidity. Fitch finds that AG’s “moderate leverage” (total adjusted debt versus total Ebitda of 3.4x in 2010) to be among the main concerns, along with a limited product diversification. Hyundai accounts for more than 70% of its revenues. It is supported, however, by a strong market position and solid performance during the downturn of 2009. In addition to importation and distribution, AG is in the retail market through 174 owned or leased dealers throughout Chile and Peru, according to Fitch. Proceeds from the proposed issuance will primarily be used to refinance existing debt and improve liquidity. JPMorgan is managing the sale, rated BB/B1.